By Reg Curren Nov. 7 (Bloomberg) -- Natural gas futures in New York declined for a second day amid rising supplies and mild weather. Gas stockpiles gained 12 billion cubic feet in the week ended Oct. 31 to 3.405 trillion cubic feet, the Energy Department said yesterday. Supplies were 2.3 percent above the five-year average. Mild weather is forecast for the Midwest next week, a region where 72 percent of households use gas for heating. ``The forecast has bounced around,'' said Brad Florer, a trader at Kottke Associates Inc. in Louisville, Kentucky, who has been buying gas as it declined. ``A couple of days ago we had people calling for a cooler bias.'' Natural gas for December delivery fell 18.9 cents, or 2.7 percent, to $6.79 per million British thermal units at 12:07 p.m. on the New York Mercantile Exchange. Prices have declined 9.2 percent this year. Higher temperatures are anticipated for much of the U.S. next week, according to MDA Federal Inc.'s EarthSat Energy Weather of Rockville, Maryland. Traders may also have been caught off guard yesterday as gas appeared poised to break above a recent trading range and instead collapsed, said Florer. Gas traded as low as $5.99 per million Btu on Oct. 27 and as high as $7.36 on Nov. 4. ``There were some cooler forecasts, an apparent breakout on the chart and a feeling we were going to get some sort of upside move before winter hits,'' he said. ``Those three things were coming together and then traders just crushed it.'' Inventory Increase Stockpiles will probably rise more, reaching a peak of 3.45 trillion cubic feet, to weigh on prices before colder weather arrives to start reducing supplies, said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. ``Fundamentally, natural gas doesn't have a lot going for it,'' he said. ``We've got plenty in the ground and it's pretty mild. If we continue mild into early December we could challenge $6'' per million Btu. If prices can stay above $6.80 per million Btu today, it may signal another move higher, Florer said. ``We had a selloff from $7.36,'' he said. ``We need to see some buying coming in and get some sort of positive move that has some strength behind it before the shorts give up.'' To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.

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